On Wednesday, we attended Nintendo’s (NTDOY.PK) E3 Analyst Briefing. We also hosted investor meetings with members of the DeNA, Electronic Arts (NASDAQ:EA), and Microsoft (NASDAQ:MSFT) management teams. Below, we have summarized the key topics discussed at each event.
Nintendo’s E3 Analyst Briefing
The presentation began with a discussion of the positive impact of Mario Kart 8 on Wii U hardware sales. Previously, on June 2, Nintendo announced that Mario Kart 8 sold over 1.2 million units during its first weekend, making it the fastest selling Wii U game ever. Over that three-day period, Mario Kart 8 had an attach rate of 18 percent, and Wii U hardware sales were roughly four times greater than they had been over the comparable period in the previous week. Management’s strategy for Wii U is centered around new IP (such as Captain Toad: Treasure Tracker, Mario Maker, Project Guard, and Project Giant Robot), new ways to play, and new product innovation (most notably the amiibo near-field communication-based line of figurines.)
Nintendo plans to develop an adapter for the 3DS that will allow the handheld device to leverage amiibo as well. On Wednesday, management described amiibo as a revenue stream that is incremental to what has already been disclosed. Management continues to see ways to drive handheld sales, despite holding a dominant market position. It will release Super Smash Bros. for the first time on a handheld in October. It is also introducing a new advertising campaign for the 2DS aimed at increasing interest in the device and Nintendo’s products among younger consumers. In the Q&A portion of the presentation, management disclosed that it does not have plans to introduce a discounted version of the Wii U that does not include the GamePad, despite Microsoft’s recent decision to launch a $399 Xbox One without Kinect. It also stated that it believes amiibo will be popular due to its functionality and the collectability of the characters. Towards the end of the presentation, management declined to provide an update on its overall mobile strategy.